VALERO ENERGY CORP/TX (VLO) Stock Analysis
VALERO ENERGY CORP/TX (VLO) Stock Analysis
Analysis from 10-Q filed 2025-10-23. Data as of Q4 2025.
Overall Grade: F (Concerning)
VALERO ENERGY CORP/TX faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 6.9% | Below expectations |
| FCF Margin | 4.7% | Cash flow pressure |
| Debt/Equity | 0.4x | Conservative leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore VALERO ENERGY CORP/TX: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: VALERO ENERGY CORP/TX earns 6.9% ROIC, Top 50% in Energy
VALERO ENERGY CORP/TX's trailing-twelve-month ROIC of 6.9% ranks Top 50% in Energy companies (sector median: 6.9%), driven by NOPAT margin of 1.9% combined with asset turnover of 2.1x. Source: 10-Q filed 2025-10-23. Gross margin of 4.4% with operating margin at 2.6% reflects a competitive pricing environment.
| Metric | VLO | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.9% | Warning | Above sector median of 6.9% |
| Return on Equity (ROE) | 9.8% | Adequate | Moderate equity returns |
| Gross Margin | 4.4% | Warning | Competitive pricing environment |
| Operating Margin | 2.6% | Warning | Moderate operational efficiency |
Cash Flow: VALERO ENERGY CORP/TX generates $5.8B FCF at 4.7% margin, positive NaN/8 quarters
VALERO ENERGY CORP/TX generated $5.8B in free cash flow (TTM), a 4.7% FCF margin, a margin that ranks Bottom 50% in Energy. Operating cash flow exceeds net income by 2.5x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-23.
| Metric | VLO | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 4.7% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $5.8B | Good | Positive cash generation |
| OCF/Net Income | 2.5x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: VALERO ENERGY CORP/TX at 0.4x leverage
VALERO ENERGY CORP/TX's debt-to-equity ratio of 0.4x reflects moderate leverage. Total debt of $10.6B offset by $4.9B in cash. Source: 10-Q filed 2025-10-23.
| Metric | VLO | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.4x | Good | Conservative capital structure |
| Net Cash Position | $-5.8B | Warning | Net debt position |
Valuation: VALERO ENERGY CORP/TX trades at 21.4x earnings
VALERO ENERGY CORP/TX trades at a P/E of 21.4x. Free cash flow yield of 11.6% offers attractive cash returns relative to price.
| Metric | VLO | Rating | Context |
|---|---|---|---|
| P/E Ratio | 21.4x | Adequate | Premium valuation |
| EV/Sales | 0.5x | Excellent | Attractive revenue multiple |
| FCF Yield | 11.6% | Excellent | Attractive cash return |
| Dividend Yield | 2.8% | Adequate | Growth focus over income |
Capital Allocation: VALERO ENERGY CORP/TX returns 7.9% shareholder yield
VALERO ENERGY CORP/TX's total shareholder yield is 7.9% (dividends 2.8% + buybacks 5.2%). Source: 10-Q filed 2025-10-23.
| Metric | VLO | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 7.9% | Excellent | Dividend + buyback yield combined |
| Buyback Yield | 5.2% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $4.0B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.9% | Top 50% | 1.0x above |
| Free Cash Flow Margin | 4.7% | Bottom 50% | 0.5x below |
| Gross Margin | 4.4% | Bottom 10% | 0.1x below |
| Operating Margin | 2.6% | Bottom 50% | 0.3x below |
| Return on Equity (ROE) | 9.8% | Top 50% | 1.1x above |
| P/E Ratio | 21.4x | N/A | - |
Financial Scorecard
| Metric | VLO | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.9% | Warning | Top 50% of sector (median: 6.9%) |
| Free Cash Flow Margin | 4.7% | Warning | Bottom 50% of sector (median: 8.8%) |
| Gross Margin | 4.4% | Red flag | Bottom 10% of sector (median: 31.9%) |
| Debt to Equity Ratio | 44.8% | Good | Moderate leverage |
| P/E Ratio (Price-to-Earnings) | 21.4x | Adequate | Fair value |
| Free Cash Flow Yield | 11.6% | Excellent | High cash return |
Frequently Asked Questions
Q: What is VALERO ENERGY CORP/TX's Return on Invested Capital (ROIC)?
VALERO ENERGY CORP/TX (VLO) has a trailing twelve-month Return on Invested Capital (ROIC) of 6.9%. This compares above the sector median of 6.9%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is VALERO ENERGY CORP/TX's Free Cash Flow Margin?
VALERO ENERGY CORP/TX (VLO) has a free cash flow margin of 4.7%, generating $5.8 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is VALERO ENERGY CORP/TX stock overvalued or undervalued?
VALERO ENERGY CORP/TX (VLO) trades at a P/E ratio of 21.4x, which is above the sector median of N/A. The EV/Sales multiple is 0.5x. Free cash flow yield is 11.6%, which represents an attractive cash return to investors.
Q: Does VALERO ENERGY CORP/TX pay a dividend?
VALERO ENERGY CORP/TX (VLO) currently pays a dividend yield of 2.8%. Including share buybacks, the total shareholder yield is 7.9%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is VALERO ENERGY CORP/TX's revenue and earnings growth?
VALERO ENERGY CORP/TX (VLO) declined revenue by 5.5% year-over-year. Earnings per share decreased by 10.9% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.
Q: Is VALERO ENERGY CORP/TX buying back stock?
VALERO ENERGY CORP/TX (VLO) repurchased $2.6 billion of stock over the trailing twelve months. This represents a buyback yield of 5.2%.
Q: How does VALERO ENERGY CORP/TX compare to competitors in Energy?
Compared to other companies in Energy, VALERO ENERGY CORP/TX (VLO) shows: ROIC of 6.9% is above the sector median of 6.9% (Top 50%). FCF margin of 4.7% trails the sector median of 8.8% (Bottom 38% of sector). Gross margin at 4.4% is 27.5 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Energy companies with available SEC filings.
Q: What warning signs should I watch for with VALERO ENERGY CORP/TX?
Investors in VALERO ENERGY CORP/TX (VLO) should monitor these potential warning signs: 1) FCF margin is thin at 4.7%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-23. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.